Potential Interactions of the Orphan Drug Act and

American Journal of Law & Medicine, 31 (2005): 365-380® 2005 American Society of Law, Medicine & Ethics

Boston University School of Law

Potential Interactions of the Orphan DrugAct and Pharmacogenomics: A Flood ofOrphan Drugs and Abuses?David Loughnot^

I. INTRODUCTION

To overcome the unattractiveness of small markets, the United Statesgovemment provides financial aid and incentives for drug manufacturers to createcures for rare diseases under the Orphan Drug Act ("the Act").' Recent researchintegrating genetic information and pharmacology holds promise for creating moreeffective drugs targeted at smaller populations than ever before. In the near future, itseems that a fiood of new drugs targeted at small disease populations could takeadvantage of the govemment benefits under the Act. Drug applicants will includetrue orphan drugs along with "Trojan" applicants that seek to co-opt the benefits fordrugs that should not qualify as orphans. Currently, the FDA appears ill prepared todiscem between the two types of applicants and prevent abuse of the system.

In 1983, the federal government passed the Act. Congress designed the Act andsubsequent modifications to provide incentives for companies to bring drugs for rarediseases to market.^ Traditionally, even when cures for rare diseases werediscovered, the large cost associated with sponsoring a drug through clinical trialsdiscouraged pharmaceutical companies from bringing the drugs to market.^ Thus,many drugs that could help rare disease populations were "orphans" without a parentcompany to sponsor them through clinical trials." The Act provided variousfinancial incentives, including grants and market exclusivity, for companies to bringorphan drugs to market.^ The Act successfully encouraged development ofpreviously unprofitable drugs, but also funded the development of severalblockbuster dmgs, which attracted criticism.*

* B.A., Molecular and Cell Biology (emphasis in Genetics), University of California atBerkeley, 2000; J.D., Boston University School of Law, 2005. I thank the members of the EditorialBoard for their insights and hard work on this note. I also thank my family and friends who have beenwith me through the years. Finally, special thanks to my mother for everything.

' Orphan Drug Act, Pub. L. No. 97-414, 96 Stat. 2049 (1982) (codified as amended as 21U.S.C. §§ 360aa-360ee (1994), 26 U.S.C. § 45C (Supp. II 1994), 42 U.S.C. § 236 (1994)).

^ 21 U.S.C. §§360aa-360ee.^ David Duffield Rohde, The Orphan Drug Act: An Engine of Innovation? At What Cost?, 55

FOOD & DRUG L.J. 125, 131 (2000).•* Thomas Maeder, The Orphan Drug Backlash, SCIENTIFIC AMERICAN, May 2003, at 83.' Id" Id.

366 AMERICAN JOURNAL OF LAW & MEDICINE VOL. 31 NO. 2&3 2005

Beginning in October 1990, the Human Genome Project ("HGP") endeavored tobring a further understanding of human genetics to biological and medical science.With a combination of government and private actors, the HGP "catalyzed the multi-billion dollar U.S. biotechnology industry and fostered the development of newmedical applications."' Pharmacogenomics developed through the combination ofgenetic knowledge with pharmacological science.*

Pharmacogenomics concerns the interaction of pharmacology with anindividual's specific genetic makeup.' Biotechnology and pharmaceutical companiesalready utilize the technology to subdivide patients with the same disease intodifferent genetic classes, changing the way drugs are delivered.'" One day, thetechnology could seriously alter the way dmgs are developed and enable tailoredtreatments for different genetic classes within a disease population." Thus,pharmacogenomics holds the potential to increase drug efficacy via administrationand development, independently.

Under the current version of the Act, pharmacogenomic technology might createan avalanche of new orphan drugs. Drug developers could genetically subdividediseases that affect a large portion of the population into groups small enough toqualify for orphan drug status. While targeted at one specific subgroup, thesepharmacogenomic orphan drugs could retain efficacy for treating other subgroups ofthe disease. For example, if a condition that affected millions of Americans wasdetermined to have a genetically identifiable subgroup with a population less than200,000, a treatment for that subgroup would qualify as an orphan drug. Afterdeveloping this specific treatment, the parent company could promote it as a drug forthe entire disease population. If done intentionally, this would violate the originalpurpose of the Act and co-opt the benefits of the Act to serve as govemmentsubsidies for a fiedgling pharmacogenomic industry.

Additionally, the orphan drug approval process could be exploited viapharmacogenomic manipulation of clinical trials. Drug sponsors could screen outpatient populations genetically prone to unfavorable drug reactions in an effort toimprove the results of clinical trials. The Act allows "clinically superior" neworphan drugs to puncture the market exclusivity shield of old orphan drugs. Thus,pharmacogenomic technology might result in drug sponsors creating clinicallysuperior results with a new drug that possesses no significant difference from theoriginal drug. This would defeat the purpose of the "clinically superior" exceptionto the guarantee of market exclusivity.

In the abuses described above, pharmacogenomically designed drugs seem togain benefits under the Act without necessarily fulfilling the goals of the Act. Forexample, some pharmacogenomic drugs might only present a more effective

' Office of Science, DOE, Human Genome Project Information, athttp://www.ornl.gov/sci/techresources/Human Genome/home.shtml (last updated Oct. 27, 2004).

' Barbara Ann Biznak, How Pharmacogenomics Will Impact the Federal Regulation ofClinical Trials and the New Drug Approval Process, 58 FOOD & DRUG L.J. 103, 103 (2003).

' Office of Science, DOE, Human Genome Information: Pharmacogenomics, athttp://www.ornl.gov/sci/techresources/Human_Genome/medicine/pharma.shtml (last updated July 9,2004). A patient's genetic code often influences any potential reactions to treatment. For example,genetics largely determines an individual's allergies to certain medications and the rate at which thatindividual metabolizes a drug. Id.

'° See, e.g., William E. Evans & Mary V. Relling, Moving Towards Individualized Medicinewith Pharmacogenomics, 429 NATURE 464, 466 (2004) (mentioning the genetic screen employed toidentify patients with a high risk of abaeivir hypersensitivity).

" See Office of Science, supra note 9 (commenting on the promise of pharmacogenomics tocustomize drugs even on an individual level).

A FLOOD OF ORPHAN DRUGS AND ABUSES? 367

alternative to other available treatments. Although possibly functioning better andwith a lower occurrence of side effects, these drugs would share a redundantfunction with more widely prescribed drugs on the market. Imitation drugs that passmore carefully screened clinical trials do not fulfill the Act's intent either. Congressintended that the Act provide incentives for creating treatments for rare diseases thatwould otherwise have no available cure.'^ Thus, drugs that provide only a slightly(if at all) enhanced efficacy do not serve the purpose of the Act and should notreceive funding.

Since the issue of abuse has been visited before, several plans have beenproposed to curb exploitation of the Act's benefits.'^ While few of the ideas havebeen implemented, many present opportunities for the FDA to avoid potential abusefrom pharmacogenomic orphan drugs. First, increased restrictions on the type ofdrugs given orphan designation would limit access. One such restriction involveschanging the definition of "same drug" under the Act. Altematively, measures suchas a windfall profits tax or shortened marketing exclusivity term limit an orphandrug's profits.'" While such financial deterrents would prove difficult toimplement,'^ the resulting burden on drug sponsors would create a disincentive forintentional exploitation of the Act's benefits. Finally, heightened reportingrequirements including pharmacogenomic data, which the FDA is exploring,'* couldprevent potential manipulation of the clinical trial process.

II. BACKGROUND

A. THE ORPHAN DRUG ACT

In 1962, Congress changed the criteria of the FDA's drug approval process,requiring a showing of efficacy in addition to safety for a drug to gain marketingapproval." The increased complexity of the clinical trial process significantlyincreased the cost associated with bringing a discovered drug to market.'*Pharmaceutical companies focused efforts on dmgs that would have large marketswaiting after clinical trials." Drugs known to treat rare illnesses were rarelysubmitted for FDA approval because the small market awaiting these drugs maderecovery of a profit almost impossible.^" These drugs were left as "orphans,"without a parent company to sponsor them in clinical trials. Therefore, people withrare diseases could not find a way to bring the known cures or treatments for theirconditions to market.

'̂ 21 U.S.C. §§ 360aa-360ee (1994)." Gary A. Pulsinelli, The Orphan Drug Act: What's Right With It, 15 SANTA CLARA

COMPUTER & HIGH TECH. L.J. 299, 332-36 (May 1999).'* Id." Id. at 336." FDA, GUIDANCE FOR INDUSTRY: PHARMACOGENOMIC DATA SUBMISSIONS (2003),

available at http://www.fda.gov/cder/guidance/5900dft.pdf." Pulsinelli, supra note 13, at 303.'* See Rohde, supra note 3, at n.39 (discussing the increasing cost of clinical trials for drug

manufacturers)." W. at 126.°̂ See Marlene E. Haffner & John V. Kelsey, Evaluation of Orphan Products by the U.S.

Food and Drug Administration, 8 INT'L J. TECH. ASSESSMENT HEALTH CARE 647, 647-48 (1992). Dr.Haffner is the Director of the Office of Orphan Products Development within the FDA.


To help solve this problem. Congress passed the Orphan Drug Act in 1982.^'The Act took effect in 1983 and was amended in 1984,̂ ^ 1985," and 1988.^" Itcreated financial incentives for companies to sponsor orphan drugs though clinicaltrials. Drug companies reacted favorably to the incentives, but some critics believethat the benefits of the Act have been awarded to drugs that exploit the Act'sbenefits and run contrary to its intent.

1. Benefits and Financial Incentives of the Act

a. Assistance in Clinical Trials

As mentioned above, the cost of bringing a drug through clinical trials cansometimes reach prohibitive levels.'̂ ^ With normal drug sponsors, the FDAmaintains a supremely objective, if not antagonistic, relationship during approval.^*However, orphan drug sponsors have a more collegial relationship with the FDA.^'Both parties work together to establish the necessary trials and get orphan drugs tomarket as soon as possible. As a result, orphan drugs make it to market much fasterthan non-orphan drugs.^^ Because the FDA is the final arbiter of validity, itssuggestions on clinical protocols help the sponsor conduct acceptable trials with asmall population available for testing.

Furthermore, the decreased time spent in clinical trials can mean a longer periodof profits in the market for patented orphan drugs. Drug patents, while not asprotective as a grant of market exclusivity, last for twenty years.^' These patents aretypically awarded long before a drug even enters clinical trials, as opposed to themarket exclusivity term, which begins after trials when a drug receives marketapproval.''" For non-orphan drugs, clinical trials typically use up a substantial part ofthe twenty-year period.'" However, the time saved in clinical trials for orphan drugscan often add another year or two onto a drug's time in the market before genericcompetition is allowed.^^

" 21 U.S.C. §§ 360aa-360ee (1994)." Health Promotion and Disease Prevention Amendments of 1984, Pub. L. No. 98-551, 98

Stat. 2815(1984).^' Orphan Drug Amendments of 1985, Pub. L. No. 99-91, 99 Stat. 387 (1985).'̂' Orphan Drug Amendments of 1988, Pub. L. No. 100-290, 102 Stat. 90 (1988).

^' See Haffner & Kelsey, supra note 20, at 647-48.^' Maeder, ju/?ra note 4, at 83." Id.^^ Marlene E. Haffner, Orphan Products - Ten Years Later and Then Some, 49 FOOD DRUG

CoSM. L.J. 593, 601 (1994).For the 70 drugs approved by the FDA in 1993, approval time averaged 33.1 months; theapproval time for orphan drugs in that year averaged 12.8 months. Non-orphan NMEs wereapproved in 25.58 months, compared to 12.4 months for orphan drugs that were NMEs.These approval times are significantly different, and significantly shorter, than in previousyears, when the range of difference was only six to seven months less for orphans than fornon-orphans.

Id^̂ ROBIN J. STRONGIN, NATIONAL HEALTH POLICY FORUM, HATCH-WAXMAN, GENERICS,

AND PATENTS: BALANCING PRESCRIPTION DRUG INNOVATION, COMPETITION, AND A F F O R D A B I L I T Y 5

(2002), available at http://www.nhpf org/pdfs_bp/BP_HatchWaxman 6-02.pdf°̂ 21 U.S.C. §360cc(a)(2) (1994).

" Haffner, supra note 28.^̂ See Haffner & Kelsey, supra note 20, at 601.


b. Tax Credit for 50% of Clinical Trial CostsIn addition to technical assistance in developing and executing clinical trials, the

Act awards a tax credit for half of human clinical trial costs incurred in bringing anorphan drug to market." This helps further reduce the expense—and risk—associated with sponsoring such products. Such a tax credit amounts to a rebate ofmillions of dollars for an orphan drug sponsor.^"

c. Federal Grants

Separate from orphan drug designation, the FDA awards orphan drug sponsorsgrants to assist research, development, and clinical trials.^^ Awards are given forclinical trials involving unapproved new drugs or unapproved uses of existing drugs.The grants range in value from $100,000 to $200,000 per year and are renewable forup to three years.''* Approximately twenty-five million dollars are currentlybudgeted for such grants each year."

d. Guaranteed Market Exclusivity

The marketing exclusivity provision represents the greatest incentive to orphandrug sponsors. The provision basically awards the parent company a seven-yearmonopoly for the indicated use of the orphan drug. Although the FDA cannot awardpatents, it will refrain from approving any identical drug used for the same purposeas the first orphan drug for seven years.^^ Therefore, companies can secure marketprotection similar to a patent even if the drug cannot be patented.'" Marketexclusivity actually provides greater protection than a patent because it protects theuse of the drug rather than a particular structure or compound. However, a keyexception to the market exclusivity grant provides that the FDA can approve anothermanufacturer of the same drug if the new version is safer, more effective, or easierto administer than the original drug.""

Congress originally intended the seven-year marketing exclusivity provision toserve as an incentive for companies to sponsor orphan drugs for which patents were

" 26 U.S.C. § 45C (2000) (excluding from the tax credit any expenses which are funded viagrant).

'•' See Wesley A. Cann, Jr., Symposium: Corporate and Legal Implications of Re-PricingMedicines in Developing Nations: Article: On the Relationship Between Intellectual Property Rightsand the Need of Less-Developed Countries for Access to Pharmaceuticals: Creating a Legal Duty toSupply under a Theory of Progressive Global Constitutionalism, 25 U. PA. J. INT'L ECON. L. 755, 791(2004) (stating that it currently costs over $800 million to bring a new drug to market. While thatfigure includes costs unassociated with clinical trials, the cost of clinical trials is a substantial portionof drug development, and a 50% credit would still amount to millions of dollars).

" 21 U.S.C. §360ee(a) (2000).' ' FDA, Frequently Asked Questions Regarding the OOPD Grant Program, at

http://www.fda.gov/orphan/grants/faq.htm (last visited Nov. 26, 2004)." 21 U.S.C. § 360ee(c) (2000) (section c amended in 2002 by Pub. L. 107-281 § 3 to increase

annual funding available to $25 million for 2003 though 2006).'* See 21 U.S.C. § 360cc (1994)." See Robert A. Bohrer & John T. Prince, A Tale of Two Proteins: The FDA 's Uncertain

Interpretation of the Orphan Drug Act, 12 HARV. J.L. & TECH. 365, 371-72 (1999) (finding that whilethe "market protection is narrow," it ean be "essentially as effective as patent protection").

'"' Maeder, supra note 4, at 83. Two other exceptions exist to the market exclusivityprovision. The first is if the sponsor company cannot supply enough of the drug to satisfy marketdemand. See U.S.C § 360ec(b)(l) (1994). The second is when the sponsor company agrees toapproval of another application. See U.S.C § 360ec(b)(2) (1994).


unavailable."' However, companies soon saw the provision as an incentive evenwith patentable drugs. Marketing exclusivity is guaranteed for seven yearsfollowing market approval,'*^ while a patent is good for twenty years after discoveryof a drug."^ While twenty years is obviously longer than seven, dmg developmentand clinical trials can use up a substantial portion of that period before the drug everreaches the market."" Thus, the guaranteed period of seven years exclusivity is anattractive option to a parent company seeking to recoup investment in research anddevelopment.

2. The Act's Success and Problems

a. Success of the ActIn the opinion of many, the Act was considered a tremendous success."^ In the

decade before the Act's passage, only thirty-four "orphan drugs" received marketapproval."* In the twenty years following its passage, 229 such drugs entered themarket."' Many groups suffering from rare diseases have received treatmentsdeveloped by both large corporations and small firms."* Furthermore, severalforeign countries have passed measures almost identical to the Act in hopes to spurorphan drug development domestically."'

b. Problems with the ActDespite the Act's successes, many critics believe that some pharmaceutical and

biotechnology companies have already exploited its benefits. Critics often point toEpogen as an example of drug manufacturers co-opting the Act's benefits ininappropriate situations. In the 1980s, Amgen was a small biotechnology companyin southem Califomia.^" Amgen submitted a promising new drug, epotein alpha, tothe FDA for orphan designation in 1986." The application said the drug wasintended to treat anemia associated with end-stage renal disease.'^ The FDAawarded Epogen orphan drug status in 1986 and Amgen brought it to market as anorphan drug in 1989." Soon thereafter, doctors realized the drug had tremendouspotential in helping patients suffering from anemia not necessarily caused by end-stage renal failure.^" Suddenly, Epogen was a blockbuster drug, bringing Amgen

"" Pulsinelli, supra note 13, at 311 (explaining that the market exclusivity provision "wasoriginally intended to compensate for a laek of patent protection").

"̂ 21 U.S.C. §360cc(a)(2) (1994)."^ STRONGIN, supra note 29, at 5."" Id."" Maeder, supra note 4, at 87."' Id.« Id.'' Id."' Id. at 83.'" W. a t81." FDA, LIST OF ALL ORPHAN PRODUCT DESIGNATIONS AND APPROVALS 45 (Feb. 19, 2004)

available at http://www.fda.gov/orphan/designat/alldes.rtf." Id." Id.; see also Amgen, History of Epogen, at http://www.epogen.com/professional/about/

epogen_history.jsp (last visited Oct. 15, 2004).'" Pulsinelli, supra note 13, at 321.


over one billion dollars in revenue each year.'^ Some critics say Amgen knew of thebroad applications of Epogen and that Amgen narrowly targeted end-stage renalfailure patients only to secure the Act's benefits and reduce the initial investmentrequired for the dmg.^* This method of subdividing a larger disease into smallersubgroups is called "salami slicing" and is acknowledged as one of the problemsassociated with the Act."

c. Off-Label Prescriptions Create Potential for AbuseBlockbuster orphan drugs such as Epogen rely upon the practice of off-label

drug prescription and usage. The FDA generally approves a drug only when clinicaltrials prove that it is safe and effective for its intended use.^^ The particular use theFDA approves becomes the drug's "indication" and must be displayed on the drug'slabel.^' However, the medical community generally accepts a doctor's right toprescribe medicine off-label.*" Therefore, doctors often prescribe drugs for usesother than the approved indication. As in the example above, Epogen was originallyapproved only for treating anemia associated with end-stage renal disease. Doctorsquickly recognized the usefulness of the drug and prescribed it for patients withother forms of anemia. A recent Knight Ridder analysis "found that the off-label usefor some drugs is as high as 90 percent of all its prescriptions sold."*'

d. Reactions to Perceived AbuseAs mentioned earlier, several orphan drugs, such as Epogen and HGH, went on

to become blockbuster drugs. These drugs were applicable to enormous diseasepopulations, but still qualified for orphan drugs designation. Many observers feelthat blockbuster dmgs that were advanced with the aid of the Act abuse theprivileges awarded to orphan drugs.*^ Therefore, several changes to the Act havebeen proposed in Congress in hopes of preventing these perceived abuses.*^Proponents of amending the Act to exclude blockbuster dmgs cite the original intentof the Act and a possible erosion of public support for the Act as motivating factorsfor such amendments.*"

B. PHARMACOGENOMICS

As mentioned in the previous discussion regarding the Act, drugs werehistorically targeted at large disease populations. Since development of drugs is

See Maeder, supra note 4, at 82 (explaining that Epogen and Procrit, an almost identicaldrug, shared the market and generated over five billion dollars revenue annually for their respectivemanufacturers).

" Id. at 87." Pulsinelli, supra note 13, at 321 -22." Ass'n of Am. Physicians & Surgeons, Inc. v. FDA, 226 F. Supp. 2d 204, 206 (D.D.C.

2002)." Id'" Id." Chris Adams & Alison Young, FDA Oversight of 'Off-Label' Drug Use Wanes, KNIGHT

RIDDER NEWSPAPERS, NOV. 4, 2003, at http://www.realcities.com/mld/krwashington/news/special_packages/riskyrx/7152542.htm.

'̂ See generally Pulsinelli, supra note 13; Maeder, supra note 4. Both authors acknowledgethe contention from critics that highly profitable drugs abuse the privileges awarded under the Act.

" Pulsinelli, supra note 13, at 324-35." E.g., S. Rep. No. 102-358, at *4 (1992) (1992 WL 193619).


costly, large markets have been required to make the endeavor profitable.*^Pharmaceutical companies and biotechnology companies alike sought products thatwould have a consistent effect on every recipient. Customization of drugs toindividual patients was initially crude, with manufacturers or doctors altering thedosage or delivery method in response to patient requirements.** All levels ofcustomization were based on physical signs or symptoms such as physical size,gender, or adverse reactions to treatment.*' The emergence and growth ofbiotechnology (aided by the Act* )̂ would help change the basis of drugcustomization.

Pharmacogenomics deals with the integration of genetic information andtechnology into the field of pharmacology.*' This hybrid field arose due totremendous advances in genetic technology aided by the Human Genome Projectand other bioinformatics projects that have rendered genetic information more easilyaccessible and usable.'" Patients' positive or adverse reactions to drugs are dictatedin a large part by genetic predisposition." Using this information and newtechnology, pharmacogenomics aims to create more effective treatments. Thepotential of pharmacogenomics includes seriously reducing the occurrence ofadverse reactions to drugs and actually developing drugs based on the genetic codeof the recipient.

Currently, pharmacogenomics is investigating methods to predict how patientswill respond to drugs.'^ Accessing information in a patient's genetic code allowsdoctors to prescribe a more effective dosage of the dmg and possibly avoid adversedmg reactions depending on patient allergies and metabolism.'^ St. Jude Children'sResearch Hospital in Memphis, Tennessee, has already developed such a test.'" Thegenetic screen employed tests patients for mutations in the thiopurine S-methyltransferase ("TPMT") gene.

" Rohde, supra note 3, at n.39." See Lars Noah, The Coming Pharmacogenomics Revolution: Tailoring Drugs to Fit

Patients' Genetic Proftles, 43 JURIMETRICS J. 1, 5 (2002) ("[P]hysicians frequently must try differentmedications at different dosages until they find the one that seems to work best in a particularpatient.").

*' See id. at 5-7 (describing a "trial and error" method employed by physicians which allowsthem to determine the correct drug and dosage for an individual patient based on outward signals suchas adverse reactions).

" See Maeder, supra note 4, at 87 (pointing out that five of the ten best-selling biotech drugsin the world in 2001 were originally approved as orphan drugs and another three were approved fororphan indications).

" AMA, Pharmacogenomics, at http://www.ama-assn.org/ama/pub/category/2306.html (lastupdated Apr. 25, 2003).

'" See Sandra Soo-Jin Lee et al.. The Meanings of "Race" in the New Genomics: Implicationsfor Health Disparities Research, I YALE J. HEALTH POL'Y L. & ETHICS 33, 36 (2001) (observing thatmany believe the sequenced human genome and related technology will help create the field ofpharmaeogenomics).

" See Evans & Relling, supra note 10, at 464-65 (mentioning many polymorphisms in geneswhich affect the metabolism and transportation of drugs); but see Kathryn A. Phillips et al.. PotentialRole of Pharmacogenomics in Reducing Adverse Drug Reactions, 286 JAMA 2270, 2275 (2001) ("Thelink between [adverse drug reactions] and genetic variability is complex, and our findings do notimply a causal relationship or that [adverse drug reaction] incidence would necessarily be reduced ifdrug selection and dosing were based on genetic variability.")

'̂ See CNN, Tailor-Made Drugs Step Closer to Reality: FDA Urges More Research on Drug-Gene Interaction (Nov. 3, 2003), available at http://www.enn.eom/2003/HEALTH/l 1/03/tailoring.drugs.ap/index.html (describing pharmacogenomic research into p450, a family of drugmetabolizing enzymes).

" Id." Marc Wortman, Medicine Gets Personal, TECHNOLOGY REVIEW, Jan.-Feb. 2001, at 72.

A FLOOD OF ORPHAN DRUGS AND ABUSES? 3 73

TPMT regulates how the liver breaks down certain dmgs, including 6-mercaptopurine, a chemical that's a lifesaver for victims of acutelymphoblastic leukemia, a deadly form of cancer that affiictsapproximately 2,400 American children and adolescents each year....Between 10 and 15 percent of children metabolize the drug either tooquickly or too slowly. The former don't gain a benefit from a standarddose, while the latter can accumulate lethal levels of the dmg.'^

This genetic screen informs doctors of the recipient's metabolic rate and allows themto administer the proper dosage of the dmg and thereby reduce the frequency ofadverse reactions.

In addition to employing existing medicine in a more effective manner,pharmacogenomics is concerned with utilizing genetic information to help createnew drugs. For example, SmithKline Beecham introduced a vaccine for preventingLyme disease called LYMErix.'* Unfortunately, a class action suit against thecompany claimed that a genetically identifiable subgroup composing up to thirtypercent of recipients are predisposed to develop "an incurable autoimmune disordercalled treatment-resistant Lyme arthritis from the vaccine."" Theoretically, agenetic screen such as the one described in the previous paragraph could avoid theadverse dmg reactions, but would still leave up to thirty percent of the populationwith no available treatment. Pharmacogemomics could potentially help design drugsbased on the recipients' genetic codes. Thus, in the LYMErix example, SmithKlineBeecham could potentially use genetic information from the subgroup to aiddevelopment of a safe version of LYMErix. Hypothetically, companies couldeventually alter drugs based on all of the relevant factors present in one individual(e.g., genetic code, weight, diet, other medication, etc.) to obtain the maximumefficacy with minimal dosages and side effects.

III. LEGAL ISSUES

The potential interactions of pharmacogenomics and the Act raise both new andold concerns. New concerns revolve around the interpretation of the Act withrespect to pharmacogenomic drugs and the ability of pharmacogenomics to alter thelandscape of orphan drug approval. Old concems include many critics' complaintsthat the drug industry abuses the benefits of the Act.

A. PHARMACOGENOMIC INTERACTIONS WITH THE ACT

1. Methods of Developing New Drugs Funded by the Act

a. High-Tech "Salami Slicing"

Pharmacogenomic technology could allow drug developers to obtain thebenefits of the Act while developing dmgs targeted at large populations. Theblueprint for such a course of action has already been revealed by the numerous

" Id.™ Id.

Id.; see also Holcomb B. Noble, Concern Grows Over Reactions to Lyme Shots, N.YTIMES, NOV. 21, 2000, at FI.


blockbuster drugs that entered the market as orphan drugs.'* In the past, this salamislicing has been based on distinctions regarding medical classifications.Pharmacogenomics might allow drug sponsors to nudge salami slicing from thearena of medical judgment towards the arena of scientific fact. This would presentnew issues for the FDA to handle.

Common diseases which affect a large number of people often have differentvariations, even if the variations only include disease sufferers with differentallergies or rates of dmg metabolism. Under the Act, a rare disease is "any diseaseor condition which . . . affects less [sic] than 200,000 persons in the United States.""Therefore, treatments for medically differentiable subgroups of a disease shouldqualify as orphan drugs provided the population is fewer than 200,000 individuals.

In some cases, a single drug may help treat many different diseases. Forexample, epoetin alfa increases red blood cell count, which helps combat anemiaassociated with end-stage renal failure and several other unrelated conditions.^"Thus, although drugs that restore red blood cells have a large market,*' two drugstreating anemia have been awarded orphan designation because they were targeted atanemia coincident with end-stage renal disease.*^ Pharmacogenomics could possiblytake this salami slicing to a new level. Congenital diseases, for example, may arisefrom a variety of different mutations that occur in single or multiple metabolicpathways.*^ Each genetic variation could possibly be considered a disease unto itselffor orphan drug designation purposes.*" The key factor in determining what drugswill receive the orphan designation will be the FDA's interpretation of the term"medically plausible."

In response to public anger regarding several highly successful orphan drugsdeveloped via the salami slicing method, the FDA declared that all disease subsetsmust be "medically plausible."*^ The exact meaning of "medically plausible" isunclear, and the use of the term has been likened to "a medical decision, with adollop of policy thrown in."** Congress has explained, "FDA declines to provideexamples of medical plausibility [of a disease subgroup] or to further develop thedefinition of this term. Application of the concept is a matter of judgment based onthe specific facts of each case."*' While this kind of case-by-case discretion willprovide the most fiexibility while examining orphan drug applications, it is notnecessarily the most desirable manner in which to control access to the Act'sbenefits. Companies that might develop orphan drugs would likely prefer a more

™ Epogen, Procrit, and HGH (human growth hormone) are all examples of blockbuster drugswhose parent companies utilized (whether intentionally or not) the "salami slicing" methodology. Seegenerally Maeder, supra note 4.

™ 21 U.S.C. § 360bb(a)(2) (1994).'" Maeder, supra note 4, at 81-82 ("Epogen proved useful for other . . . purposes: restoring red

blood cells in people suffering from bone marrow suppression as a result of taking AIDS drugs orcancer chemotherapy, and reducing the need for transfusions in surgery patients.")

*' Id. at 84 (showing that annual worldwide sales of epoetin alfa reached $5.88 billion in2001).

*̂ Id. at 81. Epogen and Procrit are the epoetin alfa products of Amgen and Ortho Biotech,respectively.

" See Evans & Relling, supra note 10, at 465 (discussing mutations in "pathways" and"networks" of genes that lead to different conditions).

*'' If each genetic variation affected a different step in the pathway, it seems that a strongargument could be made that each mutation gives rise to a medically plausible subset of the disease.

'*' Pulsinelli, supra note 13, at 322.»' Id." Orphan Drug Regulations, 57 Fed. Reg. 62,076, 62,081 (Dec. 29, 1992) (to be codified at

21 C.F.R. pt. 316).


transparent manner of application review that does not leave final discretion with anunclear group of arbiters.

Drug sponsors' preferences for simple guidelines were most clearly evidentwhen the Act was first passed. At the time, the FDA neglected to give a transparentdefinition of diseases that would qualify as an orphan. The original version of theAct defined a "rare disease or condition" as "any disease or condition which occursso infrequently in the United States that there is no reasonable expectation that thecost of developing and making available in the United States a dmg for such diseaseor condition will be recovered from sales in the United States of such drug."** Drugsponsors were reluctant to invest the time and money required to demonstratecommercial infeasibility of the drugs and were hesitant to share cost and expectedrevenue information with the FDA.*' As a result of this uncertain definition of "raredisease or condition," drug companies were reluctant to submit applications forapproval.'" In 1984, Congress decided to change the definition of "rare disease orcondition" to refer to any disease or condition which affects fewer than 200,000people." This new definition provided much more simplicity and predictability fordrug sponsors, and drug companies increased the number of applications for orphandrug status.

b. New Drugs to Treat the Untreated

In other cases, a cure to a common disease might be unavailable to a smallpercentage of that population. The LYMErix example above'^ shows a situation inwhich people affected by a common disease might create the opportunity for anorphan drug treatment. To determine the size of such a subgroup, drug developerswould turn to pharmacogenomic technologies. A genetic screen would allowdoctors to measure what percentage of people is likely to have an adverse reaction tothe conventional treatment.

Furthermore, other pharmacogenomic technologies might even help developdrugs to treat the subgroup.'^ If this genetically identifiable subgroup numbersfewer than 200,000 individuals, a cure directed towards helping its members wouldpossibly qualify for orphan drug designation regardless of whether the treatment alsoworked for the rest of the disease population.'" Such treatments would need to beanalyzed under the FDA's "medically plausible" subgroup definition mentionedabove.

2. Clinical Superiority - Not Necessarily Better

Pharmacogenomics could also impact the application of the definition of "samedrug" under the Act. From the beginning of the Act, "the FDA's . . . policy [was] to

'* Orphan Drug Act, Pub. L. No 97-414, 96 Stat. 2049 (1982) (codified and amended at 21U.S.C. §§ 360aa-360ee (1994)).

" Pulsinelli, supra note 13, at 307.'" See id. (stating that "[t]he response to the 1983 Orphan Drug Act was underwhelming")." Health Promotion and Disease Prevention Amendments of 1984, § 4(a)-(b), Pub. L. No. 98-

551, 98 Stat. 2815(1984).'̂ See supra Part 1I(B)." Evans & Relling, supra note 10, at 466.

Pamisyl is an example of an orphan drug designed to treat a subgroup of victims of acommon disease who are intolerant to the drug created for the majority of the population. Pamisyl'sdesignated indication is to treat mild to moderate ulcerative colitis in patients intolerant tosulfasalazine. The FDA has not granted market approval for Pamisyl as of February 19, 2003. FDA,supra note 51.


not consider requests for [the same] orphan drug designation made after that drughas received full FDA marketing approval for that particular disease."'^ Therefore,the marketing exclusivity guarantee prevented drugs that were viewed as the samefrom receiving orphan drug designation. Before the popularity of biotechnology,drugs typically consisted of simple chemical structures with a known active site thatdetermined the effect and effectiveness of the drug.'* For simpler drugs, the activesite determined whether two drugs were different."

However, due to the complexity of the biochemical structure of most orphandrugs, the distinction between "same" and "different" became more uncertain.'* Asa result, the FDA decided to abandon molecular analyses for the purposes ofdetermining "same" and "different" under the Act." Citing the clarity of applicationand beneficial results for patients, the FDA decided to equate "different" with"clinically superior."'"" The exception for clinically superior drugs is broad: "FDAwill not interpret the Orphan Drug Act to block approval of any drug proved to beclinically superior to a drug with currently effective exclusive marketing rights."'"'Furthermore, FDA will grant approval for drugs demonstrating superiority in clinicaltrials with a "substantial portion" of the population indicated for the original drug.'"^

Pharmacogenomics could have interesting implications for the emphasis placedon "clinical superiority." One exception to the FDA's grant of market exclusivityunder the Act is when a second drug is proven to be "clinically superior." A loweroccurrence of side effects or increased efficacy during clinical trials can serve as abasis for determining a new drug to be clinically superior to another drug.'"'' Asdiscussed earlier, pharmacogenomics can help identify patients who are susceptibleto adverse dmg reactions.'"" With such technology, a drug sponsor could createsignificantly better clinical results without altering a drug at all. Using data gatheredduring the first clinical trials and subsequent data gathered from market usage,companies could identify genetic subgroups of the population who present a higherlikelihood of negative or neutral drug reactions.'"^ Then a company could use thatinformation to design a new clinical trial excluding patients who are likely toproduce the unwanted results. Thus, the data obtained from this new clinical trialwould likely appear more favorable or impressive than the original trial even if bothtrials used the exact same drug. While obtaining such information for use increating a new clinical trial could prove difficult, the FDA should prepare for thepossibility.

" See Policy of Eligibility of Drugs for Orphan Designation, 51 Fed. Reg. 4505, 4505 (1986)."• See Bohrer & Prince, supra note 39, at 384 (asserting that "before the development of

recombinant proteins by the biotechnology industry . . . smaller, simpler structures provided the basisfor most drugs").

" Id." See id. at 387-98 (examining some earlier litigation arising from confiicts over the

definition of "same" and "different" under the Act)." Id. at 392; ^ee also Orphan Drug Regulations, 57 Fed. Reg. at 62,077 (rejecting the

proposal that FDA adopt an "active moiety" standard of "sameness" for macromolecules under theAct).

™ Bohrer & Prince, supra note 39, at 392."" Orphan Drug Regulations, 57 Fed. Reg. at 62,078.'"̂ FDA Orphan Drug General Provision, 21 C.F.R. §316.3(b)(3) (1999).'"̂ Bohrer & Prince, supra note 39, at 392."" See supra Part II(B).'"' See Noah, supra note 66, at 12 (describing pharmaceutical companies as seeking out

possible subgroups that will respond most favorably and with least side effects to a tested treatment).


B. CHANGING THE ACT TO REMEDY OR PREVENT PROBLEMS

The potential interactions of pharmacogenomics with the Act are numerous andsome open the door to possible exploitation of the Act's benefits. As describedabove, some pharmacogenomic dmgs could utilize old methods of co-opting theAct's benefits (e.g., salami slicing), while some new methods also exist (e.g.,modified clinical trials). Critics of the Act proposed several changes to try and dealwith perceived or feared abuse.'"* Those past suggestions could possibly help curbabuse from pharmacogenomics, although novel solutions might work also.

1. Methods to Control Abuse with Hindsight

Suggestions to help curb abuse of the Act's benefits have resulted in manyproposals to punish perceived abuse through removal of the Act's benefits orimposition of increased profit taxes.'"' Each of these proposals include a specific"trigger event," which would serve as a signal that the benefits of the Act are nolonger necessary or that profit taxes should be implemented to prevent abuse.

a. Termination of Exclusivity

The strongest financial incentive for abuse is the seven-year guarantee of marketexclusivity.'"* Even though tax incentives and grants for research clearly provideadditional motivation for companies to pursue approval for an orphan drug, theprofits generated from even one additional year of market exclusivity can dwarfthose other incentives. Therefore, many lawmakers interested in limiting thepotential profits realized under the Act have proposed alterations to the exclusivityterm. Several such proposals have included a conditional shortening of the termbased upon the occurrence of a "trigger event."'"'

The proposed amendments in 1992 conditioned exclusivity on the total revenuederived from an orphan drug."" After an introductory two-year period, orphan drugswould continue to enjoy market exclusivity provided total revenue from the drugnever exceeded $200 million."' When revenue did exceed $200 million, exclusivitywould be revoked."^ This "trigger event" would include all revenue derived from aparticular drug, including off-label usage. "^ Thus, drug sponsors trying to takeadvantage of a larger market via off-label uses would likely lose market exclusivityif successful.

Amendments proposed in 1990, 1991, 1992, and 1994 included a different"trigger event." Under these proposals, marketing exclusivity would be terminatedonce the rare disease population became larger than 200,000 individuals."" Thiswould have affected AIDS treatments, such as AZT and pentamidine, for which thepopulation grew well past 200,000 after FDA already awarded orphan

'"' Pulsinelli, supra note 13, at 332-36'"' Id. at 333-36.

Id. at 310 ("[Market exclusivity] is the most significant incentive . . ."); .see also Maeder,supra note 4, at 83 ("The seven-year market exclusivity clause has been key to the effectiveness of the

Pulsinelli, supra note 13, at 332-36."° W. at 334.' " Id.' " Id.'" Id."" W. at 334-35.


designation."' However, these proposals would not include off-label usage."*Therefore, market exclusivity would be revoked only if the population for a drug'sinitial indication exceeded 200,000 persons. Since pharmacogenomic drugs couldtarget small patient populations and rely on off-label usage, such a trigger eventwould not likely affect the benefits awarded to pharmacogenomic drugs.Furthermore, such restrictions might hinder the continued development of orphandrugs due to uncertainty regarding the financial future of the drug. For example,sponsors will have a disincentive to create cures for diseases affecting close to200,000 individuals if the market exclusivity guarantee will be terminated shouldthat population suddenly increase.

The effects of patent law present an important factor when contemplatingchanges to market exclusivity. If the drugs created through pharmacogenomics arepatentable, then the market exclusivity provision of the Act becomes less valuablewhen compared to the other provisions. Unfortunately, no further attention will begiven to the possible impact of patent law because the science and legal issues reachbeyond the scope of this paper. However, any potential impact is limited todiscussions involving market exclusivity and does not effect the subsequentproposals.

b. Windfall Profit TaxesSince the massive profits received from a blockbuster drug are often the source

of antipathy towards perceived abuses of the Act, one suggested remedy called for awindfall profit tax on all revenue above a certain level.'" The proposals in Congresshave typically utilized the cost of developing the drug in question as a basis fordetermining the revenue level at which the tax would begin."* Beyond the thresholdlevel, all profits would be taxed at a high rate to prevent companies from realizingthe perceived windfall."'

Unfortunately, this proposal presents too many problems. First, theadministration of such a system would be costly, since each dmg would have aunique level at which the tax would begin. Additionally, drug companies might findthis system undesirable because companies typically work hard to keep costs of drugdevelopment confidential.'^" Next, the true cost of a drug is difficult to determinebecause dmgs that eventually go to market must absorb costs of failed dmgs.Finally, a profits tax will increase a manufacturer's incentive to increase prices andpass the cost on to the consumer.'^'

c. Stricter Regulation of Off-Label PrescriptionsThe FDA could attempt to regulate the prescription of orphan drugs for off-label

uses. Since most perceived abuses of the Act result from off-label prescriptions, this

' " W. at 323.' " See id. (mentioning that the proposals call for monitoring the size of the disease population

rather than total prescriptions or sales).' " Pulsinelli, supra note 13, at 335."* See, e.g., 136 Cong. Rec. H6194 (daily ed. July 31, 1990) (allowing companies to recover

twice the development costs plus a 25 percent profit before the tax goes into effect); 137 Cong. Ree.H7777 (daily ed. Oct. 10, 1991) (calling for a tax once the development costs had been recovered).

' " Id.'̂ ^ Pulsinelli, supra note 13, at 336.'^' Li-Hsien Rin-Laures & Diane Janofsky, Recent Developments Concerning the Orphan

Drug Act, 4 HARV. J.L. & TECH. 269, 285 (1991).


would have the added benefit of targeting the class of drugs most likely to offend theoriginal intent of the Act. However, constitutional and general health care concemswould likely deter the FDA from pursuing this strategy. The FDA regulates dmgmanufacturers, not doctors, and even the regulation of manufacturers is subject tolimits regarding off-label advertising.'^^ Furthermore, it is widely believed that thepractice of off-label prescribing actually enhances the quality of health care given topatients.'^-' Thus, it appears unlikely that the FDA would successfully attempt topursue this path of regulation.

2. Preventing Abuse by Limiting Access to the Act's Benefits

Rather than implementing "trigger event" penalties for orphan drugs, the FDAcould increase scrutiny on orphan drug applications, attempting to close theloopholes that lead to perceived abuses. The benefits of this route are twofold: (1) itaffords greater simplicity than post-hoc determinations of profit or size of a certaindisease population; and (2) it keeps the benefits of the Act consistent, thus providingthe same incentives for drug companies to fund research in the future. The Act'sdefinitions of "same" and "different" and "medically plausible" provide two optionsfor limiting access to the Act's benefits.

a. Clarifying "Same " and "Different"

Dmgs that are the "same" as current orphan drugs and carry the samedesignation will not be awarded orphan drug status. As mentioned earlier, thedefinition of "same" under the Act currently refers to two drugs with nearly identicalefficacy in clinical trials. With this definition, a dmg that is structurally identicalcould be viewed as different under the Act if the clinical trial results are better.Since pharmacogenomics could help this result to occur, it might be useful for theFDA to incorporate some new definition for "same" under the Act. Since "clinicallysuperior" is correlated with "different," the definition of "clinically superior" couldprovide a useful starting point. If the FDA required that clinical superiority bedemonstrated with the same genetic demographics as the previous studies, suchabuses might be avoided.

The FDA recently took steps to request pharmacogenomic data from drugsponsors. While this policy still requires revision and expansion, suchinformation will help the FDA understand the nature of the pharmacogenomic drugsit deals with in the future. Whether drug companies will voluntarily sharepharmacogenomic data (which may be viewed as sensitive information) with theFDA remains to be seen.

b. Clarifying "MedicallyPlausible"

Only drugs targeting "medically plausible" subgroups of diseases can receivedesignation as orphan dmgs. However, the FDA and Congress have expresslydeclined to clarify the definition of "medically plausible."'^' Defining "medically

'̂ ^ See Washington Legal Found, v. Henney, 202 F.3d 331, 336 (D.C. Cir. 2000) (holding theFDA may not prevent drug manufacturers from educating doctors about off-label uses of theirproducts).

'̂ ^ James M. Beck & Elizabeth D. Azari, FDA, Off-Label Use, and Informed Consent:Debunking Myths and Misconceptions, 53 FOOD & DRUG L.J. 71, 72 (1998).

"' FDA, supra note 16.' " Orphan Drug Regulations, 57 Fed. Reg. at 62,081.


plausible" in a specific manner might help prevent abuse via salami slicing.Unfortunately, the possible definitions and subsequent ramifications have not yetbeen explored publicly. It appears reasonable that the term must remain malleable inresponse to the malleable nature of drug development. Perhaps the increasedprecision that pharmacogenomics brings to pharmacology might eventually helpprovide the FDA with the ability to define "medically plausible."

IV. CONCLUSION

Just as it aided the biotechnology industry, the Orphan Dmg Act will likelyprovide assistance to a fiedgling pharmacogenomics industry.'^* However, the FDAand Congress must be wary of the interactions between this new technology and theAct. Current regulations, developed before the advent of this new field,'^' may notbe well adapted to handling pharmacogenomic dmg applications. Pharmacogenomicresearch presents opportunities to make the Act an even greater success whilesimultaneously opening up potential avenues for abuse by sponsor companies.Salami slicing and screened clinical tests present just two manipulation techniquesthat the FDA may have to confront in orphan drug applications. The FDA shouldattempt to anticipate these problems and take sufficient steps to prevent them.

Potential solutions would address potential problems betweenpharmacogenomics and the Act while also addressing existing criticisms of the Act.The only interactions between pharmacogenomics and the Act which people willlikely find objectionable are blockbuster drugs receiving the Act's benefits.Pharmacogenomics presents a new avenue for this potential abuse, but the problemhas existed for much of the Act's life. Many solutions have been presented whichcondition the continued supply of benefits under the Act upon the economicnecessity of the orphan dmg. These remedies include revocation of marketexclusivity and windfall profit taxes, neither of which address one of the largestbenefits of the Act, namely, the aid of the FDA in getting the drug through clinicaltrials as quickly as possible.

While these proposed solutions could provide incentives to prevent abuse of alltypes, they also lower the incentives of sponsor companies to bring orphan drugs tomarket. The better solution would be to keep the incentives where they are and toeliminate blockbuster drugs from the approval process. Unfortunately,pharmacogenomics will present new difficulties in limiting abuse in the applicationprocess.

Other options include altering the regulations within the Act to take into accountthe technological advances of pharmacogenomics. Terms such as "same" and"medically plausible" contain vagueness that pharmacogenomics can exploit.Identifying clearer definitions with these terms and all regulations would help closeloopholes that let offending drugs through. If such steps are implementedsuccessfully, the Act may very well continue to operate as it has for the past twodecades without further revision.

'̂ ^ See Maeder, supra note 4, at 84-85 (describing the numerous orphan drugs created bybiotechnology companies and the growth of that itidustry incident with the success of several orphandrugs).

' " The current regulations were proposed in January 1991, less than four months after the startof the Human Genome Project. Orphan Drug Regulations, 56 Fed. Reg. 3338 (Jan. 29, 1991) (to becodified at 21 C.F.R. pt. 316).

Documents

Potential Interactions of the Orphan Drug Act and